Bill Promotes Sustainable Aviation with Tax Incentives for Alternative Jet Fuel

by | Feb 10, 2023

alternative jet fuel Bill

(Credit: Pixabay)

A bill, sponsored by Spokane Democratic Senator Andy Billig, could give tax incentives to the manufacturing and purchasing of alternative jet fuel, which are biofuels with a lower carbon intensity than conventional jet fuels. They are often made from sustainable feedstock, such as corn or agricultural residues, and can be blended with conventional jet fuels to create a cleaner fuel for the environment. 

With the drive toward sustainable air travel intensifying, airlines and other air transportation companies are ramping up their use of sustainable aviation fuel (SAF). 

Currently, greenhouse gases from airplanes make up about 9% to 12% of the country’s transportation emissions, according to the US Environmental Protection Agency. Even so,  the aviation sector remains one of the toughest to clean, in part because of a lack of sustainable aviation fuel.

The bill would incentivize fuel producers to build alternative fuel production facilities in Washington by creating a business and operations tax rate of 0.275% for the manufacture and sale of sustainable aviation fuels. The tax incentive would go into effect July 1, 2024, but only after a facility capable of producing at least 20 million gallons of alternative jet fuel is operating in Washington. 

The bill would also create a business and public utilities tax credit for some sales and purchases of alternative jet fuel, as long as the fuel has at least 50% less carbon dioxide emissions than conventional fuel.

The credits are equivalent to one dollar for every gallon of alternative jet fuel, increasing depending on the reduction in emissions. For example, alternative fuel that is 50% cleaner than conventional fuel would generate a $1 credit. Fuel that is 51% cleaner would receive a $1.02 credit, increasing by each percent up to $2 per gallon.

The proposal has a number of Republican co-sponsors in both the state House and Senate.

Senate Minority Leader John Braun, R-Centralia, said the bill could put Washington in a very competitive position, and it could provide early investment in this industry.

Airlines, other businesses, and fuel producers hoping to open alternative fuel production in Washington are in favor of the bill, saying it could make Washington a leader in the alternative jet fuel space, which has very little production in the United States right now. Some climate advocates, however, have concerns with the bill, saying it does not do enough to address climate change.

A previous version of this bill would have allowed fuel producers to receive more credits than they already do under the clean fuel standard for each ton of sustainable aviation fuel that they sell.

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